Revving up Industrial Innovation For The Next Decade

Welcome to the Zinov Podcast. You're listening to our Business Resilience Series, where we bring to you conversations between eminent industry stalwarts and thought leaders from across the globe as they discuss their insights on overcoming challenges and the mindset that helped them navigate the journey of crisis, resilience, and growth.

Welcome to the latest episode of Zinov Podcast. I'm Pari Natarajan, CEO of Zinov, and I'll be your host today. The industry sector has seen some incredible innovations in the last few years with companies like Honeywell leading the charge. Technologies such as metaverse, AR/VR, AI, blockchain have been at the core of some of the innovations. So what will the next decade look like for the industrial technology? What are the technologies that will drive innovation and transform how industrial companies operate? To shed light on this interesting topic, we have with us Suresh, Senior Vice President, Chief Technology and Innovation Officer at Honeywell. Suresh is a driving force behind the company's disruptive technologies, innovative product development, and global R&D efforts. His global perspective on business operations has helped catapult Honeywell to new heights. Welcome, Suresh. It's a pleasure to have you join us today.

Yeah, great, great to join your session, Paddy. Great to be here.

Suresh, Honeywell has been at the forefront of digital transformation in the industrial sector. Considering your technology strategy, how do you view the potential of emerging technologies, be it metaverse, AR/VR, from an industrial and manufacturing application perspective? Are these technologies aligned to Honeywell's long-term mission for the industry?

Yeah, the short answer, Paddy, is yes. We see at least AR, virtual reality, and you can call mixed reality, linked with digital twin are playing a key role, an important role to grow or focus on what we call a workforce competency, allowing the individuals and workers regardless of the years of experience to carry out tasks flawlessly in a safety and mission-critical environment. Now I think with labor scarcity, with a high level of attrition post-COVID situation, I think it's highly important that we actually starting to look at solutions that actually helps us to really pivot. So look at from an application of VR, that we do in our industrial process industry or solution standpoint. We can change the model and have individuals trained by doing in a safe virtual setup. Training can now be performed on demand and learned by performing the task in a virtual environment and not trying to replicate and what they remembered by observing the coworkers. I think that shift clubbed with what we call a digital twin, replicating the entire plant processes, system, subsystem, This is going to become an integral part in terms of how we apply both the technology, the assets, and the digital models, and how do we train the workers and improve their competency, capability, and productivity in an industrial plant or services in a building, commercial building environment, or in a warehouse setup seems like the most important in-thing moving forward. We have started seeing a big uplift in how we apply these technologies in our services and projects businesses. in our plant, industrial plant environment right now.

Interesting. So it improves the employee training because employee attrition is higher, labor shortage. It also improves productivity and also reduces errors in how they work. Very interesting. And where do you see the role of automation, right? Honeywell is a leader in automation as well. And if you look at the white-collar workers with things like generative AI and more automation technologies, it's more like the workflows in organization getting automated. But in the manufacturing workflows, how much do you see the role of labor versus pure automation? Are we anywhere close to the sci-fi world where, you know, you have a black factory, things go in and magically the products come out, or where are we with respect to those?

We are starting to really look at some of the key biggest trends, which is take a look at from a simulation, how do you apply simulation to even win new outcome-based businesses in the future? I think simulation is gonna play an important role. Behind the scenes in the simulation, you would know that all the new cutting-edge technologies are gonna be applied. So if I'm gonna commit to my customer throughput in a warehouse or a sustainability/energy efficiency throughput in a building, second simulation connected with our digital R&D, how do I connect my new idea innovation to building a product, their bill of material to a SKU? I think time has come in where Genuinely starting to look at your digital R&D thread in my own environment to say, how do I connect from a portfolio decision to the new product, new innovative idea, to how we design in our, what we call product lifecycle management, or PDM, to an ERP? Can we take decisions faster? Can we get our products faster? I think with all the supply chain constraints and things that are happening in, the kind of use cases and the kind of new ideas we are pushing hard is immense. You kind of talked about generative AI. Early days. But for me at this juncture is to understand where do you bet and how do you bet the large language models. It is not about looking at an interesting chatbot giving you an insight, however they have trained the model. And my view as a CTO for Honeywell is how do I explore the next large language model for Honeywell? How do I convert my products that I sell my customers, improve that intelligent quotient? That's my thinking right now. Early days, more to come in the future.

Interesting, interesting. So the Copilot concept can come to the physical world of products than the more digital world of product, what Microsoft is trying to do.

But think about this, we have both physical product and then with our connected enterprise business, we are starting to build more digital products through Forge. So I might envision a Copilot combination with our digital products moving forward.

Wow, that's very, very interesting. And you'll train them through their— because the biggest concern is around IP security and you train them using the data you already have in your data lake.

That's right, exactly right.

Got it, got it. And simulation again is very interesting. And you mentioned about simulation through the product lifecycle, but also you have lots of products on the customer sites already, right? And the service lifecycle management integration with Digital Thread, is that something you're focusing on or is this something that's Or is that too far away as to starting to happen?

No, Pari. In fact, the biggest thing that we are learning in this IoT and digital world is you can improve the asset performance proactively, the uptime for a period in time, is if you understand the asset model, the digital definition of the asset model. And that's an area that we have to go back and re-engineer a lot. That's where the companies are going to be starting to work diligently to build it. That's where we are focused right now, both from organic and inorganic standpoint. There, it's gonna be interesting where reverse engineering a physical asset, how do you go back and scan, convert it into a digital 3D model, and how do I really build the asset intelligent data around it? How do you store it? And that will play an important role for you to build a predictive maintenance of an asset in the future.

Interesting. So it's more reverse engineering than existing product on the field and make and create a digital twin for the product and then manage that.

I think the companies have to spend a lot more time to really reestablish those asset models faster because it's no more a one-dimensional IoT technology to say I have sensors and I can connect and then I can actually do something about it. But it's about sensors for what? It's around the asset. Do I get that asset characteristics a lot more than what we have today, which is more two-dimensional data today, but we need three-dimensional data to really transform.

That's very, very exciting. So how these technologies are being used in the physical digital world, that's super exciting. And Honeywell is a leader in some level in the quantum computing area. You were quietly incubating this business and you came up, came out of the bank. How is that? What are some of the use cases where your customers are excited about using your technology?

Parag, as you probably have seen the last 2 years, we took a bet maybe 10 years ago with ion-trapped foundational technology. I think we have, we have really got to the point where we're starting to prove both in hardware performance quantum volume performances, I probably would say that we are one among the top 2 leading, improving year on year, quarter by quarter. And then as you probably realize, we spun this Continuum, which is a combination of our hardware. And then we merged with Cambridge Quantum Computer.

Oop.

And then they brought in something called Tket, which you can actually really run your Python code on any hardware. And then they also brought in the software layer, which is quantum cyber, quantum simulation, and quantum AI and machine learning. What it does is it prepares the world and the ecosystem to start getting comfortable building algorithms and applications to run on quantum. So one, I think what we have created as a breakthrough innovation, and then we stood an entity that is starting to solve the most complex problem in the world. But one of the use cases probably I can highlight what we call the next molecular modeling. And to do a molecular modeling, we've used a classical compute techniques, but it takes time, effort to solve those equations. But with quantum, with probably, we believe that intrinsic uncertainty is solved using quantum gates. And that if you can exploit that, the uncertainty of molecular calculation can be sorted out much uniquely. So we are in the early days with the quantum volume capacity we have. We are starting to solve the modeling problem.

Okay.

And the need to solve in a much more smaller dataset. With more and more, we are gonna have in the coming months and coming years, we're gonna to have a higher edge hardware platform going to be ready with a high quantum volume, which I think will set the business to solve the most complex problems as well. So as I said, it's in the beginning today in terms of how we're going to be solving, I call it breakthrough use cases. And that's where you gotta start to think about leveraging the quantum.

So one is quantum, which is going in a high-paced innovation cycle. And then you have AI models getting trained, right? You see that somehow converging where AI models are going to be trained trained on quantum and thereby in our quest to get to more general AI, will quantum go to play a role or it'll still continue to be the more traditional cloud parallel processing-based model training?

The way I think about it, Pari, is what problem are we trying to solve? Quantum is clearly required when you want to solve randomness issues. AI machine learning is still not fully exploited in the current world of classical compute world itself. I think we can do a lot more, maybe out of 100 use cases we have, maybe 95 can be solved with the classical world.

Okay.

Where it gets interesting is where you need to have a randomness, when you need to break the monotony of what you do with zeros and ones. And if there are critical issues that you cannot solve, that's where quantum gets clearly the need for application. But AI is gonna play an important role. Machine learning is gonna play an important role. Either you're running on a classical computing or the way you're thinking about quantum world. They're two different worlds altogether, but the way you're starting to think about would change.

Got it. And going into another area. So we talked about all of the new technology, be it AI, you know, AR, VR, quantum. But the biggest concern for organizations around cybersecurity, and also you live in the more physical industrial world, right? And one is somebody hacking a computer, but in some level, somebody hacking an industrial plant. The impact is also massive. How do you see security playing a role? So what's your point of view in terms of the threat currently and how you're trying to address those?

Probably 5 years ago, Pari, the moment we realized that we are exposing our physical products with a digital connectivity or with an IoT-first exposure, we realized that we need to have an independent product security organization reporting to both the CTO structure and also the CISO or Security organization. So we have a dedicated product security chief in the company reporting to the technology and IT. And we actually built this entire competency across the board where they come from maybe phase gate 1 to phase gate 5, from designing a product security inbuilt, from designing an architecture to launching a product. They have to sign off. Today, as a CTO, we do not ship a single product from Honeywell without a cybersecurity product security chief signing off the product. So number one, we are ensuring that vulnerability of our products are controlled upstream. That's number one. Once we install, commission our product, we also work with our customers to ensure that from an integrated system and subsystem standpoint, are we really protecting and helping from all kinds of vulnerability? We do more from a consulting per se, but then in our connected enterprise business, we also have a products cybersecurity business today, which does predominantly on managed services, monitoring, controlling, and protecting the assets for our customers. But then we're also starting to see a critical issue that customers face is the convergence of IT and OT assets and how do you manage them? Because you have a lot of cybersecurity products to manage the IT assets.

Correct.

Then we come in and OT products into the market, but then how do you really manage an integrated form? We're going to be launching product later this year called Cyber Insights. And that will be coming from a connected enterprise business, which is all about tracking the vulnerability between IT and OT system. And we are working with a number of partners and customers, and we're going to be trial testing within Honeywell first in our own plants and in our infrastructure. I think if we can really solve that issue, I think that's the most important need for both our customers and industry right now.

Interesting. And that's a business unit at some level with a large addressable market for Honeywell as well. if you're able to sell that to customers. Exactly.

Exactly.

Got it. Got it. And the other big change happening is around customers' focus on sustainability. And so how are you trying to address that with customers? And how is technology— where is the CTO innovation office called in to solve the sustainability issues?

So, Parit, we did 2 things, which is where I come in. We created 2 business units. One we call Sustainable Technology Solutions Business. For an industrial environment, and we created Sustainable Building Technology business for our commercial building play. What we do in a sustainable technology solution, we develop offerings that help support a lower carbon economy. So let's really delayer what, what it means. This is the business that's going to focus on broad set of technology that are designed to help lessen the environmental impact for our customers and for the end markets. So things like renewable fuels, things like energy storage, blue-green hydrogen, carbon capture, plastic recycling. Even the last month or so, we just launched our hydrogen solution for ExxonMobil, and a number of launches are happening right there. The second part of the business is our sustainable building technology. We realized that apart from the building automation, energy efficiency, and everything else, we believe that every, every customer is going to be focused on reducing the carbon footprint. and carbon impact of the buildings. And right there, we have launched this business in terms of bringing the whole core technology and how do we measure and how do we really reduce the overall carbon footprint in each of the buildings that they may own. Because remember, the buildings can change, characteristic of a building can change from being a commercial building to things like airports, to data center, to everything else. I think those 2 businesses have really taken the lead in addressing the technology need to building products where we are trying to solve the core sustainable agenda for most of our customers moving forward.

Interesting. So again, it seems like it's a large business unit. It's just not, you're embedding into your existing products. And one other area I want to dive in, you talked about very interesting technologies, but how do you find the talent to be able to drive this, right? The skill. How do you think about workforce to be ready to innovate on these technologies and support your customers in this transformation?

This topic is pretty interesting, right? Meaning the cannibalization of our skills. Maybe 10 years ago, it used to take probably once in a 10-year lifecycle. Then 5 years ago, it seemed like every 2, 3 years you need to refresh your skill set. But I think we live in a world right now, every year or every 6 months, something is happening dramatically. I'm key in establishing this skills index or talent Index metric, because to your point, if that data is getting refreshed faster, if that index is getting refreshed faster, if you don't measure something, you can't really talk about it.

Sure.

That's my first response to that point. But a few examples. Conventionally, we would have done saying it's all organically, you've got to innovate. We would invest in advanced technology as a corporate lab or within the business unit. And then we would have taken probably a few years before we can get the technology to a commercialization discussion. Now I think we are changing an approach where we say we start with innovating with the customers. So basically we sketch out and we say we'll work with them for the first 6 to 12 months to prove whether their value prop can be solved with our technology. We get closer to— that's number one. I think we are not, we are not designing anything without knowing who the customer is, marquee customers. I think that helps to improve that cycle. Second, co-partnering with both our venture portfolio companies and with some other technology players. And then the third one is internally, we do a lot more. But one of the things that I'm starting to do very uniquely is we are trying to take bets by creating the same problem with 2 different groups within the company, trying to see how they can actually solve the same issue. I think through this process, you're actually really distributing your bets externally, internally, even within internally, your ability to handpick a talent that may bring in a skill set across the company. We are trying to take those bets and we call them breakthrough innovation. So even though I kind of talked about the operating system, that is actually pressure testing the kind of skills you need to have for you to really have a best performing output, because this is the raw material into your innovation machine and it has to really start to prove it. The churn will happen. The churn will happen naturally based on how and what you plan to do.

So one is you talked about the index, which is you measure it, you measure sooner so you can able to get your team to adopt faster. And then you're extending the innovation capability to your partners so that what is in their roadmap, what is in your roadmap, it's aligned and with your VC ecosystem. And also interestingly with your internal team where you're creating pods to be able to drive it. So one question though is if you look at the VC ecosystem, right? There is an outsized benefit if an idea succeeds. And that's one of the reasons why engineers work 24/7 in a very constrained environment, because they have an opportunity to have a big upside. And if they don't succeed, it's a huge risk. But when you are working in a large company, they have the buffer, and they probably don't have the biggest— you know, you give them a pat on the back, maybe a bonus for driving a breakthrough innovation, not the same upside. But if they fail, they can go back to their jobs. There's no So how do you not create that, simulate that environment like a VC?

So there are 5 ideas that I can say where the Honeywell team was able to build exclusive businesses and they are starting to really grow the business. Through the business, your pay or bonus or incentive is all linked to how you create. So if you really don't, sure, you go back to your core NPI products you're going to work on. But the thrill, I think we are starting to see right now, people want to be successful even within the broader Honeywell and the thrill in terms of creating a new business, driving organic growth, innovating. We are starting to see that culturally changing dramatically. People are trying to, wanting to be in that winning team or wanting to really create a new business within Honeywell. I think that's the shift that's gonna happen, Paddy. I think if companies like Honeywell can do this, I think we can actually create that external ecosystem headset within the broader company as well. That's where, but this starts from CEO, chairman, not just the CTO's job. And then the chief commercial officer and the business units. I think we are starting to really in the early days, but I think we are on the right track right now.

That's very, very interesting. So it's in some level, so we, there is a lot of changes happening in technology and Honeywell is taking a leadership in driving those both in terms of market-facing technology and also around security and sustainability, and also creating a culture within the company, right, in terms of right skills as well as the right environment for people to be able to innovate. Thanks a lot, Suresh, for taking the time to have the discussion with us. Appreciate it.

Anytime, Paddy. And thanks for having a thought-provoking discussion because as the industry needs all of us shaping up, at the same time sharing and probably co-creating new thinking in this world. So thanks for having me today and connect sooner.

And that's all for today's episode. We'll be back soon with another episode and with another industry veteran. Till then, take care and stay curious.

Thank you for listening to this episode of the Business Resilience Series. Stay tuned for more such interesting episodes. You can listen to our podcast on Apple Podcasts, Google Podcasts, Spotify, or wherever you get your podcasts from. To know more about Zenove, visit our website, www.zenove.com, or drop us a note at info@zenove.com. Follow us on Twitter @Zenove for regular updates on our content. Thank you again for listening to the Business Resilience Series of the Zenove Podcast.